Teachers Retirement System of Texas buys shares in F1

http://wap.statesman.com/statesman/pm_21988/contentdetail.htm?contentguid=zDnldoki

Not invested in the Austin F1 track, as I'm sure most of the public will misinterpret, but they actually invested $200mm in the Formula One Group.

The numbers are as follows:

$200mm to buy 3% of F1, which represents 0.18% of the retirement fund's portfolio.

This may go a long way in making more people in Texas aware of F1's existence.

 

That some of Mom's money!

That's a huge fund....handles 10,000s of customers.

 

I think this will blunt a lot of the criticism about the METF money going to COTA.

After all, if you area against it now, you must be against teachers... thus you are anti-education. Hence you hate the children!

Pretty slick. Or scary.

 

I couldnt help it, I did some quick math and it represents about an average of $150 investmemt per fund participant.

 

So F1 is worth $6.7 billion and Teachers Retirement Fund $111 billion? Wow. Would never have guessed.

 

The Canada Pension plan also participated in a $400mm loan to F1 recently.

http://www.thestar.com/business/article/1278030--cpp-on-the-fast-track-with-f1-investment


Very strange developments happening these days...

 

Yep..it handles the retirement pensions of all of our teachers in the State.....it's huge.

 

Well, I dunno, as COTA is NOT F1, and F1 is not COTA....

 

It really isn't all that surprising. It's less than 2/10ths of a percent of their portfolio.

 

10 year returns of the Vanguard Total Stock Market Index Fund (Admiral) greater than or equal to the 10 year return achieved by the geniuses at the Pension Fund. And they're paying bonuses, too:

http://www.dallasnews.com/news/state/headlines/20110423-texas-teacher-pension-fund-gave-more-in-bonuses-than-all-other-state-agencies-combined-analysis-shows.ece

Anyone suggesting there's more than a coincidence to timing of this investment and the construction of COTA?

 

Well, they had about $1bn invested in CVC funds before. I was under the impression that some of those funds had at least a fractional ownership of F1 already (they are funds that have a portfolio of the private equity companies they own).

But what might be more interesting... could getting an F1 race involve more than just the dreaded sanctioning fee? I mean, we assume a race like NJ had trouble coming up with the fee, but perhaps there is more to it than that -- additional "contributions" expected that far exceed the sanctioning fee itself. Stuff we may know nothing about...

 

I don't know the details and makeup of the Vanguard Total Stock Market Index Fund, but if it -is- composed only of stocks, then any specific comparison to a diversified fund is not the way to judge the big picture.

Any time I hear 'xx year comparison to blah, blah', I suspect someone is pushing an agenda and cherry picking the numbers. I wonder 'why 10 years vs. 5 or 20 years?', 'WHICH 10 years? The most profitable for the stock fund?', etc. Easier to do a 10 yr. comp -now-, as the market's back up, towards the highs made years ago. The Fed's 'QE Infinity' programs have a lot to do with that, not market fundamentals.

Retirement funds are different(in many ways) from individual investment approaches. The primary diff is that retirement funds are forever, while individual funds aren't(we're all gonna croak someday). Therefore, retirement funds need to focus on the lonnggggggg run, while also realizing that there will be a steady(depending upon retirement & death rates) draw down on the funds over time.

This is one reason it's easy to slam a retirement fund, as there should -never- be a 'lotto' year or a 'lose it all' year. The funds just aren't organized that way(at least the good, diversified ones). In reality, they mimic and follow the long term growth of the economy, which lately, ain't been so hot, which is why so many people get worked up about it all. If TRS had to pay out all of the $$$ el quicko, then it'd be bad news, but fortunately, that isn't gonna happen.

Give 'em time, give 'em time...if the economy never comes back or never grows at a higher rate, -then- you have some real issues.

That said, the U.S. is in such a big ditch, I don't see any high rate years coming around the bend.

TRS also made some formula changes a few years back to lessen bennies, so that'll help, long term. I don't know the details, but I know a -lot- of teachers and have heard them blab about it some.

Also, most retirement funds don't have(and aren't required to have) an inflation adjustment component, so that article is somewhat misleading there. This ain't like SocSec, which is basically a give away program with an artificial inflation formula.

< $1m total paycheck ain't much for someone running $100+B in assets, so these guys aren't overpaid.

After all, the next time you get on a Southwest Airlines plane, do you -really- want the guy/gal at the front being way underpaid?? Pay is relative to both competitive wages and the value provided. Could be lesser mgmt. mighta done a lot worse than these guys.

I vaguely recall seeing the TRS head guy on CNBC earlier this year(maybe in 2011?) and he seemed like a pretty sharp dude. Personally, I sure wouldn't wanna be running $100B in this world economy...that's a lot of money with not many good options on where to go...